Council Post: Estate Planning: A Love Letter To Your Heirs

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Robert Amoruso is the founder and CEO Gideon Strategic Partner, a boutique investment advisory firm based in Santa Monica.

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For young professionals finding their way in the world and embarking on a journey to build wealth, death can seem like a distant abstraction.

Still, the cold reality is that no one ever knows what’s just around the corner – health problems and weird accidents can happen at almost any time. All of which highlights why not having an estate plan is risky, almost like getting into a speeding car on the freeway without wearing a seatbelt.

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The good news is that it’s never too late — or too early — to put one together. And once the baseline plan is in place, investors can return to it regularly to correct the document as circumstances change.

a love letter to heirs

The first step is to create a trust and appoint a trustee. This process may seem daunting at first but may be short lived if you look at it as a love letter to your heirs.

Start with a vision of your future. Think about the most important people in your life or what charitable goals you have. Doing so should notify the distribution of your assets. The last step is detailing not only who gets what but when and how.

People with minor children have a special obligation to set up a trust and name a guardian. In an ideal world, a child’s guardian and estate trustee would not be the same person. This allows you to take advantage of people’s expertise in different areas, and it helps reduce potential conflicts of interest.

a developed document

Once you’ve made a simple will and have a basic trust, you can modify your estate plan over time. It is also important to remember that any long-term estate plan must account for your individual needs.

For this, your next step is to develop and implement a financial plan to provide continuous guidance for your long-term wealth accumulation goals. To accomplish this, do the following:

Review and update your Wills and Beliefs regularly. This is especially important as your investment portfolio becomes more complex and as your family situation changes, including everything from childbirth to divorce.

Implement tax mitigation strategies to reduce or eliminate investment income taxes. In today’s increasingly complex environment, asset placement is becoming even more important than asset allocation with respect to taxes.

Consider additional planning strategies to address the complexities associated with estate tax rules, which can vary based on your net worth.

common ownership issues

Also, keep in mind that different types of assets can – and should – behave differently. Here is a brief overview:

Handle the properties you own with care. For example, in the case of a valuable heirloom, consider assigning ownership to each item, even though this may seem tedious. Another option is to allow heirs to bid on items using the money allocated from the property.

Depending on the asset and how liquid it is, the executor can either sell it to raise cash or retain it and then distribute it to the heirs under the terms of the will.

Other assets, such as those held jointly, will go directly to the surviving joint tenant, while qualified retirement plan assets — including IRAs, 401(k)s, 403(b)s, profit-sharing plans and pension plans — are held on a single basis. Go to Designated Beneficiary.

The assets under the lien can be sold to pay off the outstanding debt. Alternatively, the executor can use the cash from the estate to pay off the debt and maintain the property.

Life insurance proceeds go directly to a designated beneficiary.

Bequeathing your assets to your chosen beneficiary or contingent beneficiary can be one of the most important life decisions you can make for their future. Even unmarried people should have a will – wouldn’t you want to give your wealth to a relative or someone else you care about deeply.

Whatever the case, the road ahead can be tough for the most important people in your life. So, gear up – someone needs you.

Mr. Amoruso is not a lawyer and does not provide legal advice. The information in this article has been taken from publicly available sources that are believed to be reliable. Please contact a qualified attorney in your area for legal advice specific to your specific situation.


Businesshala Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. am i eligible?


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